With only five years left, it looks like the indexing mutual fund side of a famous bet is going to be out the hedge fund side. So the shadow of index funds isn't just tormenting active mutual fund shops.
In his latest column, Morningstar's John Rekenthaler highlights
the halfway results of a bet famed investor Warren Buffett
made with hedge fund shop Protege Partners
in late 2007. Buffett bet $1 million (to be paid to charity by the loser) that the Vanguard 500 Index Fund
] would outperform a portfolio of five hedge funds of funds (HFOFs) picked by Protege. And though the decade-long bet is far from over, it looks like Buffett is way ahead.
"It's likely that Buffett's portfolio is now 30 percentage points ahead of the competition," Rekenthaler writes.
For more on the bet, read Rekenthaler's full column
Neil Anderson, Managing Editor
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